Election 2014

May 23, 2014
Iain MacLeod

We are in an election year and although the campaigning has not officially started it is in fact well underway. I guess every day between elections all parties are fighting to get their message across and their ideas out in front of the public.

Given that in New Zealand’s mixed member proportional representation system or MMP (like Germany’s) where Members of Parliament are elected in part based on winning geographic constituent seats and the balance from party lists (in proportion to their share of the national vote) this week’s political enemies can become next week’s bedfellows. It results in a lot of public posturing and in elephant circles what would be defined as ‘mock charges’ but then everyone just gets on with running the country quietly behind the scenes in a generally co-operative manner.

New Zealanders are not extreme. We tend to vote in centre right or centre left blocks and this MMP system usually sees us vote out a tired (and after two terms often arrogant) Government and replace them with a new crowd that share similar ideologies but without wild ‘lurches’ in policies. There is little room in our Parliament for extreme views. They don’t get elected.

It seems upon closer examination all major parties continue to be committed to fostering and enhancing that sacred social pact through which New Zealanders have chosen to ‘socialise risk’ and to ensure equal opportunity for all by way of an honourable and genuine attempt (if not always perfectly executed) at maintaining a meritocracy among the citizenry. This opportunity is delivered through tax payer funded health, education and social security systems. They might differ on the fine print of delivery but in this country everyone is on the same page in terms of preserving that merit based opportunity.

This helps to explain why New Zealand is overwhelmingly more socially cohesive than most countries and is a model that serves us well.

We have had for the past six years a centre right Government that is riding high in the polls. In recent months the National Party has been polling between 47- 50% which in effect would allow it to govern alone.

New Zealanders are a canny voting lot and back in 1996 changed our Parliamentary system so that it would be extremely difficult for any one party to govern alone and therefore be able to promise whatever they liked before an election and do whatever they felt afterwards.

As a result come election day no Government ever makes it to 50% and therefore they have to team up with smaller parties who usually poll somewhere around 5%.

Tails do not wag dogs under this system as many feared it would. Perhaps it is our DNA – perhaps it is just a realisation that if you only get 5% of the vote you can hardly make demands that 95% of the voting public rejected.

Although on the face of it our political theatre in Parliament can be as bitchy as elsewhere when I look at countries like the US (political gridlock), Thailand (democratic implosion), South Africa and Singapore (effective one party states but with very different economic outcomes!) I think we do reasonably well.

The current Government has done much to warrant re-election in my view (and I don’t usually vote for them by the way) and in last week’s budget show they deserve another term in Parliament. I believe they will get it.

As the sun sets on the global financial crisis New Zealand is expected over the next 12 months to return to surplus (small, but real) and is enjoying the best terms of trade in 40 years. The Government did borrow up big time from 2009 – 2014 in order to ensure that New Zealanders were somewhat shielded from the worst of the GFC but in doing so we saw public debt rise from around 20% of GDP to around 27%. They could have gone down the austerity route but didn’t. They could have decided to print money like the US Federal Reserve but didn’t. They found some middle ground and were criticised by those on the fringes for doing so.

In hindsight our leadership might just have done better than almost any other western economy leadership.

The economy is growing strongly and last year’s 2.7% GDP growth is expected to increase to around 3 -3.5% this year and the same over the next three.

That will result in an economy growing from US$150 billion to close to US$175 billion (not bad for 4.4 million people……) within four years.

Government’s priority now is to pay down public debt and get it back to 20% of GDP by 2019-2020.

Some are calling for tax cuts. Most New Zealanders when asked say we don’t want them.

Although many of us subscribe to the view that lower taxes do encourage investment, entrepreneurship and risk taking, given the state of the national accounts and considering what we continue to get for our taxes through education of our children, health when we need it and social security, I can understand why New Zealanders are not demanding tax cuts.

Those on $50,000 a year (graduates, office workers technicians, tradesmen and similar) pay a nominal rate of 17% and if they are in a relationship with two children that tax is effectively zero.

If you earn $100,000 a year you will pay about $23,000 in taxes. Most skilled migrants would be earning this if both partners are working.

It is in my view fair although like everyone I would prefer to be paying less. I do not begrudge it on the whole.

While reiterating that with surpluses comes a responsibility to pay down debt the Government surprised everyone last week by announcing new spending on families that took the left by surprise.

  • Our 14 weeks of paid parental leave will from next year increase to 18 weeks (at 80% of the one parent’s salary).
    All children, irrespective of background under the age of 13 will now visit their Doctor for free (no catches). Currently it is only the
  • Under-sixes that enjoy this tax payer funded privilege

A very smart political move but one that is real and meaningful – especially to migrants with young families finding their feet after arriving here.

Speaking of migrants, you can vote in this year’s election if you have held your resident visa for only 12 months. For more information and how to register and vote visit New Zealand Electoral Commission. Check out how and participate in our thriving democracy come the election later this year.

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